Aluminum Processors' Operating Rate Drops to 63.6%; Prices Fall Amid Off-Season Decline
This week, the operating rate of leading aluminum downstream processing enterprises in China was recorded at 63.6%, down 0.4 percentage points WoW. Off-season characteristics emerged, with all sectors generally under pressure, while only aluminum wire and cable bucked the trend and strengthened.
This week, the operating rate at leading aluminum downstream processors in China came in at 63.6%, down 0.4 percentage points WoW. Off-season characteristics emerged, with most segments under general pressure, while only the aluminum wire and cable sector bucked the trend and held up well. The primary aluminum alloy operating rate held steady at 59.4%; auto production improved MoM but remained down YoY, and enterprises maintained stable production and destocking. The aluminum plate/sheet and strip operating rate slipped 0.4 percentage points to 71.6%, supported at the bottom by can stock and energy storage, but plain plate demand was weak. The aluminum wire and cable operating rate rose 0.6 percentage points to 68.6%, benefiting from improving margins on power grid orders as aluminum prices pulled back and from export orders fluctuating at highs. The aluminum extrusion operating rate slid 1.8 percentage points to 55.8%, as architectural extrusion weakened and small and medium-sized enterprises faced insufficient new orders for industrial materials. The aluminum foil operating rate fell 0.4 percentage points to 72.9%, as packaging foil entered the off-season and air-conditioner foil remained under pressure. The secondary aluminum operating rate declined 0.5 percentage points to 53.4%, with production cuts driven by tighter invoice supervision and weakening demand. Overall, the aluminum processing industry pulled back further this week under the combined effects of off-season conditions, demand divergence, and raw material cost pressure. In the short term, operating rates across most segments are expected to remain under pressure, while only aluminum wire and cable is likely to continue holding up well, supported by its order backlog and exports.
Primary Aluminum Alloy: This week, the operating rate at industry-leading primary aluminum alloy enterprises held at around 59.4%, largely unchanged WoW. Supply side, producers remained focused on fulfilling long-term contracts, keeping production pace relatively steady, with operations generally normal and no clear signs of output increases or cuts. Demand side, according to CAAM data for May, auto production rose 1.6% MoM but declined 1.2% YoY. The MoM improvement suggests end-user demand is gradually recovering and market conditions are improving at the margin, while the YoY decline reflects that the pace of demand recovery still lagged expectations at the start of the year. Against downstream primary aluminum alloy demand, although current market demand is slowly recovering, existing production is broadly sufficient to meet current orders, leaving the segment’s operating rate lacking clear upward momentum in the short term. The recent pullback in aluminum prices has eased purchasing pressure on downstream buyers to some extent; market sentiment has improved slightly from earlier, and trading activity is showing gradual signs of recovery. However, inventories at some enterprises remain relatively high, constraining subsequent output increases. Overall, no significant changes have appeared on either side of the current primary aluminum alloy market. Manufacturers remain focused on steady production, digesting inventories, and fulfilling long-term contracts. Industry-leading enterprises’ primary aluminum alloy operating rate is most likely to continue near to current levels next week, with limited room for short-term fluctuations.
Aluminum Plate/Sheet and Strip: The operating rate at leading aluminum plate/sheet and strip enterprises slipped 0.4 percentage points WoW to 71.6% this week. On orders, can stock consumption performance was impressive, with both mother coil and finished can exports remaining strong; finished can direct exports this year are expected to exceed 8 billion cans, doubling YoY, providing robust support for can stock consumption. Energy storage end-users maintained relatively high operating rates, with products such as battery casings and brazing materials under accelerated delivery due to downstream production schedules extending into Q3. Automotive sheets and plates benefited from a MoM recovery in NEV sales and the steady expansion of exports, but a YoY shortfall remained. The consumer market situation looked severe; against the current backdrop of high aluminum prices, client acceptance was extremely low, leading to persistently weak end-use demand for plain plates. In the short term, while can stock and energy storage orders form a bottom support, plain plate orders are under downward pressure, aluminum price volatility is intensifying, and downstream speculative cargo pick-up sentiment is prevalent. The operating rate for aluminum plate/sheet and strip is expected to remain relatively weak in the near term.
Aluminum Wire and Cable: China’s aluminum wire and cable industry operating rate came in at 68.6% this week, up 0.6 percentage points WoW. The weekly rate continued to strengthen, primarily because recent declines in aluminum prices eased pressure on raw material costs. Margins on previously held power grid orders improved, encouraging manufacturers to proactively raise production loads, leading to a slight climb in capacity utilization rates. On the order side, the third batch of material tenders for UHV projects was awarded, including 19,400 mt of steel-cored aluminum stranded wire, with delivery cycles spanning from October 2026 to August 2027, forming some support for future order scheduling. Meanwhile, the winning bidders list for the second batch of UHV materials was officially announced on June 8, awarding 111,000 mt of wire, further solidifying medium- and long-term order reserves. Although current domestic power grid end-use demand remains at a stage of relative quiet following a concentrated cargo pick-up period, lower aluminum prices have stimulated producers’ willingness to release backlogged orders, and combined with continuously high export orders, both domestic and external demand have coordinated to drive a steady rise in the industry’s operating rate. The aluminum wire and cable operating rate in China is expected to maintain its relatively strong trend in the short term.
Aluminum Extrusion: The aluminum extrusion operating rate fell 1.8 percentage points WoW to 55.8% this week, with off-season characteristics for the industry gradually showing. For architectural extrusion, the recent temporary pullback in aluminum prices approached downstream psychological price levels, stimulating some purchasing demand and providing a limited offset against the traditional off-season. However, the underlying weakness in the real estate sector remained unchanged, with total aluminum use in construction consistently under pressure. Some enterprises in South China reported that as large-scale engineering orders previously on hand were delivered and wound down, new orders failed to fill the gap; enterprises have accordingly lowered production schedules and reduced raw material stockpiling, making off-season weakening signals in architectural extrusion increasingly evident. For industrial extrusion, structural divergence continued, but overall resilience was better than in the architectural segment. Automotive aluminum extrusion maintained relatively high operating rates this week, with NEV sales rebounding MoM in May and consumption expansion in mid- and low-end car models forming strong rigid demand support for aluminum extrusion, sustaining the segment’s operations in the short term. However, some small and medium-sized enterprises reported that their current industrial extrusion orders on hand could only cover them until mid-June, and new order generation was insufficient; if no new orders are added in late June, operating rates will face downward pressure. Overall, off-season pressure on architectural extrusion materialized this week, dragging down the segment’s operating rate; while industrial extrusion retained some resilience, the emerging order gap for small and medium-sized enterprises is an issue that will subsequently pull on overall segment performance. Under this dual pressure, the aluminum extrusion operating rate is expected to continue to be under pressure and decline next week.
Aluminum Foil: The operating rate at leading aluminum foil enterprises slid 0.4 percentage points WoW to 72.9% this week. On orders, food packaging foil and pharmaceutical foil began to enter the traditional off-season, June-August, with production and sales expected to fall roughly 10% MoM; however, aseptic packaging foil orders remained robust, providing a partial offset. Battery foil benefited from strong energy storage demand; ESS battery production rose over 7% MoM in May, approaching 80 GWh, with June production schedules expected to increase another 3%. Some double zero foil production lines continued to be switched over to battery foil production. The air-conditioner foil segment remained under sustained pressure: household air conditioner domestic sales production schedules fell 23.3% YoY in June, and end-user enterprises, in order to control cash flow, no longer engaged in stockpiling as in the same period in previous years. The air-conditioner foil industry thus entered its downward phase earlier than in previous years. In the short term, the packaging off-season effect and the drag from air-conditioner foil will dominate the trend, and the operating rate will continue its pullback.
Secondary Aluminum: The operating rate at leading secondary aluminum enterprises fell 0.5 percentage points WoW to 53.4% this week, suppressed primarily by both the raw material and demand sides. Raw material cost side, continuously tightening invoice regulation in multiple regions led to difficulties in compliant procurement and high tax burdens; enterprise margins were pressured and even inverted, forcing some producers to cut production. Demand side, the downstream sector continued its weak off-season pattern, end-user demand from OEMs pulled back, order growth was limited, market transactions were mainly rigid restocking, and downstream buyers showed little inclination to rush to buy amid continuous price rise. Overall, invoice constraints tightened raw material availability from the supply side, while weakening demand compressed shipment volume from the consumption side. The combined effect pushed enterprises to reduce production loads either voluntarily or compulsorily. If invoice sourcing issues continue to escalate, compliance oversight remains tight, and the consumption off-season deepens further, the industry operating rate will still face downward pressure, and the trend of supply-side contraction will persist.
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